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IMF urges quicker repair of eurozone bank sheets

A fresh report by the IMF has highlighted the crisis lender's continued worries about the state of banks in the 18-member eurozone. It urged the area to accelerate its cleansing of post-crisis balance sheets.

"In the euro area, the incomplete repair of bank and corporate balance sheets continues to place a drag on the recovery," said IMF Monetary and Capital Markets Director Jose Vinals.

The Washington-based crisis lender called on European policymakers to put an even greater emphasis on rigorously checking the health of the banking system and implement a "determined cleansing" of balance sheets. Unviable banks needed to be closed down, the report concluded.

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IMF hails global recovery - highlights risks

IMF hails global recovery

The IMF appeared alarmed about the European Central Bank's record-low interest rates not having translated into a stronger flow of credits to smaller companies and households in the region's most stressed economies.

Looking at the big picture, the IMF said financial stability had improved somewhat in many advanced economies since its last report in October, but it added things had worsened a bit in some emerging markets.

"Emerging market risks have risen as external conditions have tightened and the tide of liquidity has turned," the lender said. It feared asset price moves might be amplified by lower market liquidity, meaning "more investors could be found running for the exit than the exit door could accommodate."